Paystack, the Nigerian fintech giant acquired by Stripe in 2020 for $200 million, has forged a strategic partnership with the Nigeria Inter-Bank Settlement Scheme (NIBSS) to introduce a revolutionary direct debit product for Nigerian merchants.
News About Nigeria understands that this collaboration aimed to streamline payment processes for businesses, allowing them to charge customers’ bank accounts directly.
Direct debits are poised to transform the landscape of recurring payments in Nigeria, offering convenience for services like DStv, Tizeti, Netflix, and Spotify subscriptions. By eliminating the need for debit card information, Paystack’s direct debit feature enables merchants to automate transactions, reducing costs associated with card transactions and enhancing the overall payment experience.
Traditionally, direct debits in Nigeria required in-person visits to banks, creating inefficiencies in managing the process. However, Paystack’s partnership with NIBSS has connected nearly two dozen banks, leapfrogging manual integration hurdles and significantly reducing the time it takes to set up each consumer to mere seconds.
This strategic move aligns with Paystack’s broader strategy to develop fintech products directly on consumers’ bank accounts, circumventing the traditional reliance on debit cards. The company’s recent initiatives, including “pay with bank transfer” and virtual POS terminals, have contributed to a significant shift, with bank transfer transactions accounting for 34% of the company’s total activity since the beginning of 2023.
With direct debit services gaining traction in Nigeria, Paystack’s latest offering is well-timed, catering to the evolving preferences of businesses and consumers alike. Users can link their bank accounts to merchants, undergo a one-time transaction for authentication, and manage direct debit mandates through an online portal—a groundbreaking advancement in Nigeria’s rapidly evolving fintech landscape.
